Canadians’ concerns that the legalization of cannabis will negatively impact property values have not played out in other jurisdictions where marijuana is legal. In fact, in some areas, homes within 160 metres of a retail marijuana store were valued close to 10% higher than those outside of that radius. Fixed rate mortgage rates are expected to fall through the second and third quarters this year though expectations are that they will start rising again later in 2019 and through 2020. Metro Vancouver homes sales fell to the lowest point in more than 30 years in March. The BC government is moving forward with a registry of beneficial ownership of real estate in the province in an attempt to curtail money laundering and tax evasion.
IN THE NEWS
There has been much concern over whether the legalization of cannabis will negatively impact residential property values. An October 2018 survey by real estate company Zoocasa found that 42% of responded believed a dispensary nearby would reduce the property value of their home, while 48% indicated that a dispensary nearby would reduce their desire to buy a home in that area. However, those concerns have not played out in other jurisdictions where cannabis is legal. According to the journal, Economic Inquiry, in Colorado, which legalized marijuana in 2014, houses within 160 metres of a retail marijuana store were valued at 8.4% higher than those outside of that radius. Elton Ash, regional executive vice president for Re/Max of Western Canada also believes concerns about falling real estate prices are unfounded and attributes the discrepancy between Canadian expectations and market trends on “preconceived notions stemming from illegal grow operations that have dominated the black market trade in cannabis”.
According to the economics division of the BC Real Estate Association, due to low government bond yields, the five-year qualifying fixed mortgage rate is expected to fall from 5.34% in the first quarter of 2019, to 4.99% in the second quarter, and further drop to 4.484% in the third quarter. The average discounted rate for a five-year fixed mortgage is expected to fall from its current 3.44% to 3.0% in summer 2019. However, both the qualifying and discounted rates are expected to start rising again later in 2019 and through 2020.
Homes sales in Metro Vancouver for March hit the lowest levels in more than 30 years. The Real Estate Board of Greater Vancouver said 1727 homes were sold in March 2019, the lowest for the month since 1986. One local realtor believes the slowdown stems from the differing market expectations of buyers and sellers: buyers have a certain price they want given the outlook of the housing market, while sellers are still adjusting to the downturn in the market conditions and the reality that the market is no longer willing to pay what they are asking.
The BC government has introduced legislation to establish a new publicly accessible registry of beneficial ownership in real estate. The intent of the registry is to address money laundering in the BC real estate market by increasing transparency in ownership by requiring disclosure from corporations, trustees and partnerships about the underlying (beneficial) owners of land and is in part a result of a report on money laundering in the BC real estate sector. Multiple layers of legal and beneficial ownership can obscure sources of funds and facilitate money laundering and tax evasion.
BC UNEMPLOYMENT RATES
||Rate from April 2019 to May 2019
||Rate from February 2019 to March 2019
Table source: http://srv129.services.gc.ca/ei_regions/eng/rates_cur.aspx
REAL ESTATE ACTIVITY (RESIDENTIAL) BY REGION
- Units sold: 31.4% decrease from Mar. 2018
- Active listings: 52.4% increase from Mar. 2018
- New listings: 11.2% decrease from Mar. 2018
- Benchmark price: $1,011,200.00 (7.7% decrease from Mar. 2018)*
- Units sold: 7% decrease from Mar. 2018
- Active listings: 37.9% increase from Mar. 2018
- Benchmark price: $843,600.00 (2.8% decrease from Mar. 2018 for detached homes)*
- Units sold: 26.6 decrease from Mar. 2018
- Active listings: 46.2% increase from Mar. 2018
- New listings: 0.2% decrease from Mar. 2018
- Benchmark price: $963,100.00 (4.2% decrease from Mar. 2018 for detached homes)*
- Units sold: 13.80% decrease from Mar. 2018
- Active listings: 19.69% increase from Mar. 2018
- New listings: 3.83% decrease from Mar. 2018
- Average residential price: $524,150.00 (5.11% decrease from Mar. 2018)
- Units sold: 0.3% increase from Mar. 2018
- Active listings: no measurable change Mar. 2018 (3 fewer listings from Mar. 2018)
- New listings: 15.2% increase from Mar. 2018
- Average residential price: $305,132.00 (7.9% increase from Mar. 2018)
*Benchmark based on the MLS HPI® benchmark for single family detached homes.